What is Forex Trading?

 

As a beginner, it is important for you to understand the market first before stepping into the trading education. Abbreviated as Forex, Foreign Exchange Market is the most traded market among investors and is sometimes denoted as FX. It is world’s largest financial market with daily turnover of $5 Trillion. Forex facilitates trading for 24*5 hours (excluding Saturday and Sunday) across by the banks, institutions, individuals over the counter in whatever market is active at that time. Forex is a centralized marketplace having plenty of international currencies with live market rates and trading centers in London, New York, Tokyo, Zurich, Frankfurt, Hong Kong, Singapore, Paris, and Sydney.

 

Now the forex trading! Forex trading or currency trading simply refers to trading in currencies from a long list of currencies pairs. Here, you trade one currency against the other. You either buy one currency simultaneously selling the other or you sell one currency simultaneously buying the other. You make this attempt by speculating the direction of the market in the future and making self-prediction of specific amount of profit from a trade.

 

 

For instance- you observe that ‘Canadian Dollar (CAD)’ would rise against ‘America Dollar (USD)’; you would buy ‘CAD/USD’ pair at low price with a purpose of selling it at a higher price in order to generate profit from that particular trade. If CAD strengthens, profit will go in your favor and if USD gets strong value, you will be in a losing position. This is how the market involves the trading risks not only the reward.

 

You can trade more than one currency pair at the same time which will result different consequences. Some will go in your favor while others will be against your decision. Though forex has a large number of currency pairs to provide more trading opportunity to an individual, it has 5 significant currency pairs- EUR/USD, USD/JPY, GBP/USD, and USD/CHF.

 

To trade forex or the currency pairs, you need to contact a forex broker to provide you the best forex trading platform supportable to different technological devices like mobile, tablet, desktop and laptop.

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